February 26th, 2013
I knew the Kindle was successful — but I never dreamed it was literally destroying its competition. But last week, Barnes and Noble told its investors that not only did their Nook division lose money for the second year in a row. They also reported that its loss this year was going to be even bigger than their losses were last year — and a company insider suggested they’ll put a smaller emphasis in 2013 on trying to sell Nook devices.
The disappointing figures covered both Nook sales and whatever revenues they were earning from selling ebooks for the Nook. And Barnes and Noble is now lowering their predictions for how much they’ll be able to earn throughout all of 2013. On Monday, the New York Times reported that’s the worst news for the company’s investors. “The problem was not so much the extent of the losses, but what the losses might signal: that the digital approach that Barnes & Nobles has been heavily investing in as its future for the last several years has essentially run its course.”
But the most interesting detail in the Times’ article is that it’s not just investors who are losing hope for the Nook, but also the executives at Barnes and Noble. Citing a person “familiar” with the company’s inside strategy, they suggest that in 2013 Barnes and Noble may try to emphasize its vast library of digital ebooks in deals with other tablet manufacturers (like Samsung and Microsoft). “They are not completely getting out of the hardware business,” the source said, “but they are going to lean a lot more on the comprehensive digital catalog of content.”
One technology blogger even wrote that the Nook was in a “death spiral,” noting that Barnes and Noble had already issued an earlier warning in January about disappointing Nook sales over Christmas and during the last three months of 2012. “Companies very rarely warn twice in 40 days about the same problem,” writes a blogger at BGR.com, adding “When it happens, it usually indicates that something so unexpected is taking place that executives just cannot wrap their minds around it.” Amazon’s got a better distribution plan for their Kindle tablets outside of North America, but Barnes and Noble seems to be having problems even selling ebooks to their current Nook customers. For these reasons, he writes, “It is hard to see how the Nook’s revenue decline is going to be reversed in 2013.
“And it’s very hard to see why any new consumer who researches his or her purchase for even five minutes would now take the betamax risk of buying a Nook.